Top Advisor to the largest sovereign wealth funds and institutions in the world, Michael Belkin, warns central banks are lighting a rocket under the gold price.

Michael Belkin: “The GDX has doubled (+104%) since its January 19th low. Gold, silver and gold/silver mining stocks have commenced a new long-term bull market. It’s like buying the Nasdaq in April 2009. Meanwhile, global stock indexes have been in a broad topping process for years, our global composite stock index stands at the same level as it did in December 2013, two and one half years ago. The trend has not been your friend in stock indexes, every rally has fizzled out for buy-and-hold stock market investors…

Continue reading the Michael Belkin piece below…

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The long-term model forecast for the XAU gold stock index is only in the first or second inning of a 12+ inning game. The still-depressed XAU (90.73) stands -10% below its January 1979 inception level of 100. It’s down from 37 years ago! The S&P500 is up 1943%, the Nasdaq is up 3794% since January 1979.

Gold is a currency, it is held as a reserve asset by central banks along with their FX holdings. QE, ZIRP and negative interest rates (NIRP) have destroyed central bank credibility and the value of major reserve currencies (dollar, euro, yen, yuan).

The failed policies of central bank credit expansion are lighting a rocket under the gold price, the asset that central banks can’t devalue. Precious metals mining stocks are leveraged to a rise in the gold price, profit margins and mineable reserves surge when precious metals prices rally. These are the conditions for a long-term bull market, in which dip-buying is rewarded with constantly higher prices. We continue to recommend the accumulation of gold and silver mining stocks on brief pullbacks. Gold is the central bank put.”

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